Are You Certain Your Overtime Calculations are Correct? The Rule Most Small Businesses Get Wrong

Have you ever heard a business owner say, "I only pay overtime if someone works more than 80 hours in two weeks"? If you're nodding, you're not alone. It’s a common belief—but unfortunately, it’s wrong.

Let’s clear this up: Federal law (and Virginia law) requires that overtime be calculated by the week, not the pay period.

So what does that really mean?

Under the Fair Labor Standards Act (FLSA), non-exempt employees must receive overtime pay (time and a half) for any hours worked over 40 in a single workweek. Even if you pay your team bi-weekly, you can't average those two weeks together. If your employee works 45 hours in Week 1 and 35 in Week 2, that’s not 80 hours flat. That’s 5 hours of overtime you owe from Week 1.

Unfortunately, a lot of business owners don’t realize this until they’re dealing with a Department of Labor audit. And trust me, that’s not when you want to find out.

Why Job Classification Also Matters

Another layer of this: who even qualifies for overtime? That’s where employee classification comes in.

Employees are either exempt or non-exempt under the FLSA. To be exempt (not entitled to overtime), an employee must:

• Be paid on a salary basis,

• Earn at least $684/week, and

• Perform exempt duties (typically executive, professional, or administrative roles).

If someone doesn't meet all three criteria, they’re non-exempt. And that means weekly overtime rules apply—no exceptions.

What About Industries with Special Rules?

Some industries have unique overtime rules or exemptions under the FLSA. These include:

• Agriculture: Certain farmworkers may be exempt from overtime.

• Trucking and transportation: Some drivers under the Motor Carrier Act have different requirements.

• Healthcare and residential care facilities: There are limited exemptions for live-in staff under specific conditions.

• White-collar roles: If they meet the exemption test, employees in executive, administrative, or professional roles may be exempt.

But these exceptions are narrow and often misunderstood. The default is: assume overtime is owed unless you’re absolutely sure it’s not.

Bottom Line: Compliance Isn’t Optional

Getting overtime wrong isn’t just a math issue—it’s a compliance issue. Misclassifying employees, underpaying overtime, or failing to track hours accurately can lead to serious legal and financial consequences.

If you’re unsure whether you’re handling overtime correctly, it might be time for a compliance check.

Need help figuring out if your team is properly classified or whether your pay practices are in the clear? That’s exactly what I help small businesses and nonprofits with.

Reach out. Let’s get it right—before the DOL comes knocking.

Stay tuned for our upcoming blog series, where we’ll take a deeper dive into specific industries and how the overtime rules apply to them.

Want a refresher on wage & hour basics, including common missteps? Check out our earlier post: How to Stay Compliant with Wage & Hour Laws (Without a Full HR Team)